[AustinOverton]

So, I will be 18 soon and will have access to my savings which are currently in low risk investments and total about 30k. I want this money working harder for me.

Here is my situation, I will be a senior in high school when I turn 18 and will be heading off to college next summer. So, it might not be best for me to start a brick and mortar business with the money yet. Should I put it into higher risk stocks or maybe put it as a down payment for a mortgage and get into the real estate market? I'm very knowledgeable with websites and could probably put some of the money into a nice website and use quite a bit for affiliate marketing which sounds pleasing to me.

What should I do? What would you do?

[radreality]

First of all, are all the taxes current on the money?

if you're knowledgeable about websites, I would say that you should take a little bit of it 5k or so and play around with some ideas.

The remaining 25k in my opinion should be used towards real estate. Either buying yourself a home or buying an investment property. If you are going off to college, a home for yourself might not be the smartest thing right now. You can flip houses for immediate returns or you can buy rental properties for a little cash flow and some equity. In your position I personally would buy a rental property, just because you will be pre-occupied with school and other stuff that 18 year olds do.

But that brings up a problem. You are 18, no credit history. If you have had a good paying job for the last 2 years, that will help, but you'll still run into a problem. I would at least look into it though.

A better option might be to just take the money and put it into some moderate investments, and hopefully make some money; until you have enough credit history, credit score, and income to be able to purchase a house.

I also posted this article on my website: What should I do with 30k?

______________________________
Robert Falk
Business Developer / Investor
Self Help & Success Forum

[jasaunders]

If you don't know what to do with the money, then it should remain in safe investments. By safe, I don't mean a .5% savings account, you could easily invest in money market, CD's, bonds and stocks and make 5-10% return annually. When you figure out what you want to do, then use the money.

You are going to be throwing away the money if you use it now "just because you have access to it". Wait until something you enjoy and have confidence in comes along and invest in that. Don't put it in riskier investments or start a venture just because you can.

[roadtoharvard]

Want a 7% guaranteed ROI (current can bus prime + 1%)? If are getting student loans pay them when they come due. This is the equivalent interest rate you will be saving by paying your loan(s) (assuming rates stay constant which they probably won't). It's tax free too . One could argue about the benefits of interest payments being tax deductible but fresh graduates rarely benefit from the tax savings because they don't have high enough incomes for the tax savings to take effect. If they do benefit they would have to do the analysis themselves to see the costs/benefits.

In the mean time (4 year college degree) I would just plop it into something guaranteed. GIC, High yield savings account, MM whatever has the best interest rate taking into account fees and taxes and pay the loan once graduated.

Assuming no tax bite or fees, Emigrant direct is offering 5.05% APY. FV of $30,000 at the end of 4 years monthly compounded (I didn't find their compounding period so for the example I'll assume monthly) would give you $8,689.24 in interest on your investment. Not too bad. You could use that interest to start a business once graduated.

I would probably do what I wrote previously except that I would put the interest earned yearly into a few index funds. Anyway, to each his own.

[buynick]

ING.com has a money market account that's currently yielding 4.5%. Completely safe and completely liquid.

[xcbellx]

I would suggest buying a condo or small rentable house near the campus that you're going to attend. You can rent out rooms while at school and rent out the home when you leave.

[Young Spark]

I'd either suggest 1 of 2 things:

1. As stated in the post above mines... you could always invest your money into a rental property. The benefit of this is that it'll provide you a good monthly income. The downside, since technically its a rental property, you'd be responsible for any fixings needed, property taxes or anything along them lines. The tenant doesn't own the home or rental property, if my mind serves me right, you'd be responsible for handling all that. I may be wrong so someone correct me if I am.

2. Invest in a REIC... they usually have a good return rate but weigh the REIC, does it satisfy what your looking for, is it going to give you a good return, what's the risk ratio... etc. I know some pay out 7.5% (or more) annually. Investing $10k of that $30k could yield you $750 more a year, and imagine what it'd be like if you compounded it.

I would do the math for you on number 2 but I have to leave right now, maybe when I get back later.

[radreality]

Originally Posted by Young Spark

1. As stated in the post above mines... you could always invest your money into a rental property. The benefit of this is that it'll provide you a good monthly income. The downside, since technically its a rental property, you'd be responsible for any fixings needed, property taxes or anything along them lines. The tenant doesn't own the home or rental property, if my mind serves me right, you'd be responsible for handling all that. I may be wrong so someone correct me if I am.

Thats why you budget the yearly numbers, not just the monthly numbers. You have to buy a house where there is enough cash left over after paying the mortgage to save a little towards any repairs that might be needed and also some towards the property taxes each year. A lot of people end up getting out of rental properties just because they don't like it because they didn't plan well enough; and they bought houses where the numbers didn't fully workout.


______________________________
Robert Falk
Business Developer / Investor
Self Help & Success Forum

[AustinOverton]

I do plan on spend 5k of that on websites and affiliate marketing. I am really really considering rental properties also and if I must maybe I'll have one of my parents co-sign the loan.

I really appreciate all of your advice. Also, I'm not 100% sure on the taxes of the money. It is being handled by a local investment firm and I would like to assume they are taking care of all that.

[roadtoharvard]

Ok, my take on the suggestion of Real Estate:

Can he qualify for a mortgage with a reasonable interest rate with his level of income or will he have to obtain something that is sub prime? My guess is if he qualifies at all it will be for a variable rate sub prime loan. Can he afford the payments on a sub prime mortgage? Can he afford interest rate risk on his mortgage? What will his down payment be? Remember that he has to cover inspection costs, closing costs, Realtor fees, property taxes as well as have sufficient cash flow to cover vacancies, repairs, litigation, insurance, mortgage payments and the litany of pain in the ass things that come with owning property. I'd be willing to wager his 30k will get eaten up quite fast. Saying get enough cash flow to cover these expenses is one thing but actually doing it is another. Is your typical tenant a college student? What happens in the down months where they flock home? Have you factored in a higher vacancy rate due to this?

Besides the biggest problem i see is him not having any experience. If he doesn't have any then he's just a babe in the woods waiting to get slaughtered. I'm for owning property when it is appropriate but in this case I would advise against it.

[crackah]

Buy a house, or some shares